Author Topic: How to handle making money off of a friend.  (Read 8901 times)

cbr shadow

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How to handle making money off of a friend.
« on: December 16, 2013, 01:18:56 PM »
A friend of mine is getting rid of his 1999 Camry and buying a brand new $30k car.  Instead of selling privately he decided to sell to Carmax.  He called me and was excited that they’d give him $2000 for it.  I told him to sell it privately to get a lot more.  He said he doesn’t have time to do it, doesn’t want to deal w/ craigslist, etc.  He finally said “if you think you can get more than $2000 for it, how about you buy it for $2100 and flip it?”.  I thought about it for a while and did some very quick research, then decided to do it.
I test drove the car real quick and it runs spectacularly.  I said I’d give him $2200.  I was VERY clear though, that I don’t plan on keeping the car.  I said:
1)   You should sell it privately yourself
2)   If you’re just going to trade it in, I’ll buy it to flip on craigslist
His response was “You can buy it from me and sell it for $3,000 and I won’t be upset.  I told you I w
So we agreed last night that I’d buy it today for $2200.  I took a picture while I was there and put it up on craigslist (before I even have the car) for $2800 firm.  I got lots of calls already about the car, and 2 people want to see it tonight.  I’m sure it’ll sell for the $2800..  So I will make $600 for about an hour of work.
What do you think of this?  This is the ideal situation in a business sense, but I’m literally picking up the car from his house and driving it to my house to meet someone to look at it an hour later.  I probably wont even have time to clean it.
Assuming it sells, do you think I should keep the money?  I’ve done similar situations before, but in the past I’ve sat on the car for a week or replaced some parts, etc.  I think it’d be awkward if he found out I sold it an hour after buying it.  I made it very clear that I plan on selling it right away for a profit but it still feels weird.
I’m trying not to look at it as “making money off of a friend”, and to look at it as I made money for a good “investment” and he made $200 more than he was already willing to accept.
Thoughts?
-CBR

iamlindoro

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Re: How to handle making money off of a friend.
« Reply #1 on: December 16, 2013, 01:22:21 PM »
IMO, You've given him every caution you possibly could.  Sell it, keep the money, offer to explain what you did if he's ever curious and let him learn the lesson.

Greg

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Re: How to handle making money off of a friend.
« Reply #2 on: December 16, 2013, 01:23:46 PM »
You should feel fine about this.  Your friend stated clearly that they didn't want the hassle of selling it via craigslist etc.  You on the other hand are willing to do the work required, to earn that extra $600.  No guilt, just the very real reward of effort.

Also, it's very noble of you to offer more than they wanted for the car.

MissStache

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Re: How to handle making money off of a friend.
« Reply #3 on: December 16, 2013, 01:29:56 PM »
Your friend is happy because he made more money on the car than he expected.  You've been upfront about what you are planning on doing with it and he flat-out said it was ok.  I don't see any problems here.

But if you really want to be generous, buy him a nice bottle of wine or a 6-pack as a thank you once the check has cleared!

MgoSam

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Re: How to handle making money off of a friend.
« Reply #4 on: December 16, 2013, 02:12:01 PM »
Also, Carmax would be doing the same thing. I personally would be happy for my friend to make money flipping my car than a private company.

Spork

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Re: How to handle making money off of a friend.
« Reply #5 on: December 16, 2013, 02:12:43 PM »
You've been perfectly honest.  He understands.  No harm.  No foul.

You're doing exactly what Carmax was going to do.  They were going to buy it and sell it for more.  $600 is the price of convenience to have someone else manage it.  If I didn't want to mess with it, I'd rather a friend got $600 than some skeezy used car salesman.

Jamesqf

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Re: How to handle making money off of a friend.
« Reply #6 on: December 16, 2013, 02:19:26 PM »
Yeah, looks like a win-win situation to me.  He made more than Carmax would have given him and avoided the hassle of selling it himself; you made good money for a few hours work.  You should both be happy.

CommonCents

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Re: How to handle making money off of a friend.
« Reply #7 on: December 16, 2013, 02:46:07 PM »
I wouldn't worry.  You were clear and he got a better deal than he would have.  If you continue to feel bad, then I suggest cutting him a check for $200.  That splits the money ($2800-2000=$400) between the two of you and he hopefully also learned something too.  :)

Woodshark

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Re: How to handle making money off of a friend.
« Reply #8 on: December 16, 2013, 03:48:15 PM »
You’re fine. I’ll tell you about a similar thing that happened to me last month. My in-laws drove 2.5 hours to visit us. While they were here their 1998 Mercury Marquis started running rough and missing. It was a Sunday so my mechanic was not open.  They really wanted to get home so I promised to run it by my mechanic Monday or Tuesday. They left the car with me, rented a car from AVIS and drove home. The next day I get a phone call. “The car is past it’s useful life to us. We no longer trust it. Fix it, sell it or donate it as is…it’s yours now” click. They are in their 70’s and the car was no beauty. It had 175,000 miles, faded paint, a few dents and the interior was not great. Still if it was fixed, it would go for around $1200 or so.  I told them I’d get it fixed and sell it for them. They said sure, but they insisted that we will split the profits.

Long story short is my mechanic took a couple of weeks to get to it but managed to get it fixed for $350. I cleaned it up, took pictures and put it on Craigslist for $1200 firm.  The phone started ringing within one hour and it was sold in less than 24 hours. I called my in-laws and told them the news. They then told me that since they were going to have it towed to the junkyard and since I did all the work, any profit made was mine to keep. After a 30 minute phone argument with me trying to give them their share I finally just said thank you.


Guizmo

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Re: How to handle making money off of a friend.
« Reply #9 on: December 16, 2013, 05:03:11 PM »
I bought my SIL iPhone 4 for $100 and resold it for $140. She knew what I was doing as I was upfront about it. I even told her she should sell it herself. I guess the hassle of selling it was worth $40 to her.

Guizmo

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Re: How to handle making money off of a friend.
« Reply #10 on: December 16, 2013, 05:04:45 PM »
Also, there is the danger of selling something to someone else on Craigslist. They might rob you or even kill you. You never know.

Spork

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Re: How to handle making money off of a friend.
« Reply #11 on: December 16, 2013, 05:15:09 PM »
Also, there is the danger of selling something to someone else on Craigslist. They might rob you or even kill you. You never know.

Bah. 

Life is dangerous.  Driving (or GOD FORBID! biking) could get you smashed flat on the pavement.

Yes, it happens.  But not nearly as often as the news would want you to think it does.  Every time I've looked at statistics, it seems to show that life as we know it in the first world has gotten safer and safer.

golfer44

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Re: How to handle making money off of a friend.
« Reply #12 on: December 16, 2013, 05:19:58 PM »
Just be careful - you'll probably get with this once or twice, but 'flipping' cars without an auto dealer license is illegal in most states.

Guizmo

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Re: How to handle making money off of a friend.
« Reply #13 on: December 16, 2013, 05:54:53 PM »
Also, there is the danger of selling something to someone else on Craigslist. They might rob you or even kill you. You never know.

Bah. 

Life is dangerous.  Driving (or GOD FORBID! biking) could get you smashed flat on the pavement.

Yes, it happens.  But not nearly as often as the news would want you to think it does.  Every time I've looked at statistics, it seems to show that life as we know it in the first world has gotten safer and safer.

I agree with you. My SIL doesn't so she sold me her phone knowing full well I would make an easy 40 bucks in less than an hour.

chasesfish

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Re: How to handle making money off of a friend.
« Reply #14 on: December 16, 2013, 06:51:52 PM »
Send him a nice gift card to ease your mind, tell him you made more than you expected,

Personally, I'd be happy to let a friend make good money on something I'm not willing to deal with.

sol

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Re: How to handle making money off of a friend.
« Reply #15 on: December 16, 2013, 07:42:28 PM »
Isn't there some hassle involved in transferring the title, twice?  Don't you technically have to pay sales tax on the purchase?

Spork

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Re: How to handle making money off of a friend.
« Reply #16 on: December 16, 2013, 09:22:00 PM »
Also, there is the danger of selling something to someone else on Craigslist. They might rob you or even kill you. You never know.

Bah. 

Life is dangerous.  Driving (or GOD FORBID! biking) could get you smashed flat on the pavement.

Yes, it happens.  But not nearly as often as the news would want you to think it does.  Every time I've looked at statistics, it seems to show that life as we know it in the first world has gotten safer and safer.

I agree with you. My SIL doesn't so she sold me her phone knowing full well I would make an easy 40 bucks in less than an hour.

Much like Dr. Sheldon Cooper, I don't always catch sarcasm.

Greg

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Re: How to handle making money off of a friend.
« Reply #17 on: December 16, 2013, 09:45:53 PM »
Quote
Isn't there some hassle involved in transferring the title, twice?  Don't you technically have to pay sales tax on the purchase?

Depends on where this is happening, but usually you only do when a title transfer occurs.   You can sell a friend's car without owning it as long as you have a signed title and a bill of sale.  Usually. 

Paul der Krake

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Re: How to handle making money off of a friend.
« Reply #18 on: December 16, 2013, 10:01:43 PM »
Quote
Isn't there some hassle involved in transferring the title, twice?  Don't you technically have to pay sales tax on the purchase?

Depends on where this is happening, but usually you only do when a title transfer occurs.   You can sell a friend's car without owning it as long as you have a signed title and a bill of sale.  Usually.
I believe we had a thread here about this a few months back. I can't find it, but the lesson was that it can easily be done since the flipper can leave the buyer's info blank on the title for the next person to fill in. The notary only cares about the seller's info and signature. As far as the state is concerned, the middleman never owned the car.

Fuzz

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Re: How to handle making money off of a friend.
« Reply #19 on: December 16, 2013, 10:26:08 PM »
Just be careful - you'll probably get with this once or twice, but 'flipping' cars without an auto dealer license is illegal in most states.

No need to be careful. This is google-able. In Washington State, you can flip up to 4 cars a year without a license. But check the statute or call your DMV, if you're curious about this. 

scrubbyfish

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Re: How to handle making money off of a friend.
« Reply #20 on: December 16, 2013, 10:41:37 PM »
I do stuff like this (what your friend is doing) regularly.

I do everything I can in my life, and also cannot bear selling things. I love giving money/jobs/opportunities to friends, and I am grateful when they receive the opportunities and happy when they gain from them. For me, it always feels like a total win win!

Rienk

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Re: How to handle making money off of a friend.
« Reply #21 on: December 17, 2013, 04:06:29 AM »
Like everyone else is saying you agreed on a win-win deal with your friend, there is no need at all to feel guilty about it or offer to compensate him, he probably wouldn't want any extra compensation anyway. In the future the ideal deal might be to agree in advance to split the profits instead of making a fixed offer, but there's absolutely nothing wrong with what you did.

markbrynn

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Re: How to handle making money off of a friend.
« Reply #22 on: December 17, 2013, 05:29:56 AM »
I'll be the first to disagree (at least partially).

If this is a friend of yours (what I would consider a friend: you know them well, get along, can talk about things), then I would tell them what happened. Personally I would probably offer to give them more of the money since it was so easy and I wouldn't want friends thinking I'm happy to make a buck off of them. If you know your friend would want you to have the money (they have plenty, they're laid back, etc.), then don't offer.  I would still tell them the story, otherwise you look like you're hiding something.

This comes back often in these forums from what I see. You can be legally, and even morally, right, but that doesn't mean it's the best choice for preserving relationships with your friends and family. If you and the friend are close, you'll both be happy that you (between the two of you) made some extra money, no matter who actually keeps it.

My two cents.

pom

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Re: How to handle making money off of a friend.
« Reply #23 on: December 17, 2013, 05:53:19 AM »
I am also a "full disclosure" kind of guy.

I would probably do something like: "hey just sold your car in an hour for a great profit, let me treat you and your wife to a nice dinner".

cbr shadow

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Re: How to handle making money off of a friend.
« Reply #24 on: December 17, 2013, 06:55:51 AM »
Alright well I went through with it and bought the car for $2200.  When buying the car I told my friend that I already have someone coming to look at it tonight.  The person looking at the car bought it for my asking price ($2800).  So the car is gone.
I was honest with my friend about the car and what I sold it for.  He seemed impressed that it would sell so quickly and for so much, but said "Good I'm just glad you didn't get stuck with the car for a long time.". 
As far as I'm concerned, that's the end of it.

Also respond to comments above, I never signed the title.  On paper, my friend sold the car to the guy I sold it to.  I believe Illinois allows 5 car sales annually before you're considered a dealer, but I assume this wouldn't officially count since there's no record of me selling the car really.

Thanks everyone for your thoughts!

Janie

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Re: How to handle making money off of a friend.
« Reply #25 on: December 17, 2013, 07:18:11 AM »
Sounds like a win/win (now if only you could talk him out of parting with 30k for the new car you'd be doing him a real favor).

cbr shadow

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Re: How to handle making money off of a friend.
« Reply #26 on: December 17, 2013, 08:51:46 AM »
Hey I tried to talk him out of the Subaru Forester Limited (the $30k car) but he was justifying it by saying that it was a good value if he kept it until it dies and all of the usual stuff.  We're good friends, but I'm not his dad so I want to push my finanicial beliefs on him too much.  I do send him MMM links every once in a while though :)

gimp

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Re: How to handle making money off of a friend.
« Reply #27 on: December 17, 2013, 11:14:46 AM »
Definite win/win/win. Your friend got more than he wanted, you made money, the buyer got a good car. The only people crying are carmax, and I don't think they need a lot of pity.